Neither taffy nor caramel, and certainly not nougat or chocolate, Tootsie Roll Industries has its success wrapped in brown-and-white waxed paper. As one of the country's largest candy companies, it makes and sells candies, including the vaguely chocolate-flavored Tootsie Roll, which has been produced with the same formula and name for nearly 120 years. Tootsie Roll Industries also makes such well-known candies as Andes mints, Junior Mints, Charleston Chew, Mason Dots, and Sugar Daddy. Its Charms and Tootsie Pops brands make the company one of the largest lollipop producers in the world. The married team of Melvin Gordon (chairman and CEO) and Ellen Gordon (president and COO) control the company's voting power.
Based in Chicago, Tootsie Roll boasts operations across North America. It taps distribution channels in more than 75 countries.
Every day the company produces some 64 million Tootsie Rolls. The company also makes more than 16 million lollipops a day. Tootsie Roll maintains more than a handful of production plants: four in the US, one in Mexico City, and one in Ontario, Canada. It operates as a single reportable segment that involves the manufacture and sale of confectionery products.
Not typically an acquisitive candy maker, Tootsie Roll has grown its business prudently by acquiring established candy brands, such as Andes chocolate-flavored mints. The purchase has allowed Tootsie Roll to expand into chocolate chips for baking and Crème de Menthe cookies, both made under the Andes brand. It also has extended its flagship Tootsie Roll brand to ice cream bowls through its partnership with Denali Flavors for a Tootsie Roll-flavored frozen dessert.
Sales and Marketing
The company uses a network of about 100 candy and grocery brokers to distribute its products in North America. Tootsie Roll's candy is sold in a wide variety of venues, including supermarkets, warehouse and membership stores, vending machines, dollar stores, drug stores, the US military, charitable organizations, and convenience stores. In the US, it counts some 6,000 customers. Über retailer Wal-Mart accounted for 23% of the company's 2012 sales.
The company has focused on expanding its digital marketing and social media initiatives in recent years. It's targeting candy-buying mothers age 25 to 44 because this group is considered to be tech-savvy and a prime demographic for Tootsie Roll. In the months leading up to the company's key Halloween selling season, the candy manufacturer rolls out campaigns using a combination of target-specific web sites, specialized Internet ad networks and social media, and search engine and portal ads. Its long-standing "How Many Licks?" Tootsie Pop commercial runs on popular cable TV programs at various times throughout the year and with a particular emphasis on the peak Halloween season.
Logging a record $546 million in sales in fiscal 2012, Tootsie Roll's net sales rose 3% as compared to the prior year. Tootsie Roll attributes the increases to effective marketing and selling programs, including back-to-school and pre-Halloween programs, as well as higher price realization needed to recover some of the rising commodity and other input costs experience in recent years.
Its international business delivered similar successes. During the same reporting period, Tootsie Roll increased its sales in Canada by expanding its products portfolio and by getting more of its candies into dollar stores. In Mexico, the company boosted its sales there, thanks to another strong Christmas season. Exports also grew in 2012 for Tootsie Roll with new distribution in several promising markets, such as Europe, the Middle East, and China.
As compared to 2011, net earnings rose 18% in 2012 due to a jump in net sales partially offset by an increase in selling, marketing, and administrative expenses, reflecting a rise in certain deferred compensation expenses in 2012.
Tootsie Roll logged $9 million in capital expenditures in 2012 and $38 million during the three years prior. These include investments in plant operations, equipment, and information technology.
The company has always been secretive about its Tootsie Roll recipe. Mr. and Mrs. Gordon -- both well beyond retirement age -- won't reveal their succession plan either, although younger family members are said to be interested. A sweet spot for 90-something Melvin, in 2009 he ranked 49th in chief executive pay (with more than $4 million that year) among the 100 largest public companies located in Illinois and northwest Indiana.
Executives Melvin Gordon and Ellen Gordon have sole investment and voting power over Tootsie Roll's shares.